Spotlight Cancún: Climate Financing is Not the Problem, it’s the Solution

Aaron Leopold, Guest Blogger
Another in a series from the Triple Crisis Blog and the Real Climate Economics Blog on the Cancún Climate Summit.

If only one thing has been sure at the climate negotiations in Cancún this year, it is that money talks. The intense and constructive discussions on and off the negotiating floor on inter alia, the adaptation fund, a new green/climate fund, funding the avoidance of deforestation and forest degradation, the climate-related budgets of development banks, and the need for government assistance to more effectively bring private sector on board, will all be for naught if previous experience with development financing is any indication how climate funding promises pan out over the coming years.

Among funding nations’ top concerns at the moment is monitoring, reporting and verification (MRV) of the $100 billion per year by 2020 promised last year in Copenhagen to help alleviate the most catastrophic aspects of our global climate conundrum. MRV from the funders’ perspective should ensure climate financing is indeed used for adaptation and mitigation purposes and not squandered or sent to a Swiss bank. From the recipient side, it should ensure the norm of backpedaling on, and non-delivery of, financing promises is kept to a minimum.

The topic of funder accountability received glaring attention in Cancún at a side event organized by Avoided Deforestation Partners, where Guyanese President Bharrat Jagdeo railed Norwegian Prime Minister Jens Stoltenberg and the World Bank for hindering delivery of the first installment of $250 million in climate funding which Guyana had fulfilled the requirements for 11 months ago. Stoltenberg responded that first Guyana needed to “show Norwegian voters they’re getting something back” and further illuminated the situation by noting that “We won election last year but you never know, elections are uncertain things.” President Jagdeo could have said the same thing, how will his election chances look if the $250 million does not get delivered soon?

At another event, Indian environment minister Jairam Ramesh, on the topic of the $10 billion in fast-start climate financing promised globally for 2010 (part of $30 billion for 2010-2012), was quoted as saying, “I am deeply, deeply disappointed. That target is far from being met. The fast start finance is neither fast, nor has it started, nor is it finance.” Indeed, the World Resources Institute has created an excellent Summary of Developed Country ‘Fast-Start’ Climate Finance Pledges illustrating that: little of this money has been delivered to date; some of it will be loans or is conditional on buying donor exports; and massive proportions of pledges are double counted as existing development financing and new climate financing, ie. they are not “new and additional” as agreed in Copenhagen.

With fundamental issues of trust such as those illustrated above still far from being resolved, and political will on financing performing a fine balancing act in Europe and the United States (with the former dealing with a snowballing resurgence of the financial crisis, and the latter with an incoming legislature planning to dissolve the House of Representatives panel on climate change), the time has truly come for wealthy nations of the world to fundamentally shift their modes of thinking. Climate financing isn’t the problem. It is the solution.

Government spending fueled the radical advancement of the sciences in the 20^th century, leading to incredible breakthroughs in all branches of science and propelled advancements in the medical, communications, and other industries. The opportunities presented by greening growth are vast yet empirically still in their infancy, and therefore present risks which the private sector has been begging governments to assist them in overcoming by creating long-term, predictable, clear policies to enable an environment for expansion of greener technologies. Governments have known this for years but are dragging their feet nearly across the board, speaking about technology transfer without recognizing that green technologies are not governments’ alone to transfer, speaking about needing to fund renewable energy but ignoring that half the world’s population needs a renewables industry focused on small-scale production, and failing to recognize that in the 21^st century, the word tax is not always a political death knell, but can be a harbinger of innovation.

The inability of the UNFCCC to inspire trust and political will between developing and developed countries is a historical relic of colonialism, and of Cold War and neoliberal influenced development ministries. We are now supposedly entering a new paradigm, one of global cooperation and inclusive growth. For this dream to become a reality however, the policy makers of donor countries must better recognize that climate finance is an investment, not a cost.

Aaron Leopold is the Director of the Environment and Sustainable Development section at the Global Governance Institute.